Analyzing and Interpreting Return on Assets
Tiffany&Co. is one of the world's premier jewelers and a designer of other fine gifts and housewares. Presented here are selected income statement and balance sheet amounts (dollars in thousands).
| Current Year | Prior Year |
Net sales | $2,859,997 | $2,938,771 |
Net income | 220,022 | 323,478 |
Average shareholders, equity | 1,652,243 | 1,721,131 |
Average total assets | 3,051,594 | 2,883,833 |
Required:
1. Compute ROA for the current and prior years and explain the meaning of the change.
2. Explain the major cause(s) of the change in ROA using ROA profit driver analysis.
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